Sears Holdings Corp (SHLD) Earnings Relief Rally May Be Short-Lived

Sears Holdings Corp (NYSE: SHLD) reported better-than-feared second-quarter numbers on Thursday afternoon but once again failed to demonstrate it has turned the corner and found a viable path to long-term sustainability. Analysts say it’s difficult to make a case to buy SHLD stock, and the company will likely continue to hemorrhage sales.

Sears reported a second-quarter earnings per share loss of $4.68 on revenue of $3.18 billion. Revenue was down 25 percent from a year ago.

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Despite aggressively closing its least-profitable Sears and Kmart locations in recent years, same-store sales declined 3.9 percent. Although that decline narrowed from a 11.9 percent drop last quarter, Sears sales continued to fall even off of extremely easy year-over-year comparisons.

Most Wall Street analysts have dropped coverage of SHLD stock at this point. According to CNN, only a single analyst provided second-quarter estimates for the stock, predicting an EPS loss of $2.41 on revenue of $2.9 billion.

Sears’ total net loss for the second quarter was $508 million, and the company ended the quarter with $441 million in total cash balances.

CEO Eddie Lampert says Sears is committed to its turnaround plan.

“While we are encouraged by the improved comparable stores sales trend we experienced in the second quarter, and the positive comparable store sales of 3 and 2.5 percent achieved in the months of July and August, respectively, we have yet to achieve our goal of returning the company to profitability,” Lampert says in a statement.

Last month, Sears said it will close another 46 stores in the fourth quarter. As of May, the company was operating 894 total stores, down from more than 3,300 in 2006.

CNBC analyst Jim Cramer says there’s only one way for investors to look at Sears’ $3.18 billion in second-quarter revenue.

“There’s still $3.18 billion in sales this quarter left to be donated to Home Depot ( HD) and Lowe’s ( LOW) and Costco ( COST) and a couple of stores in the mall, a little bit more than a billion dollars less than last year at this time,” Cramer says.

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“That’s really the only way you should think about Sears any more — it’s a place that others can take sales from.”

SHLD stock gained more than 19 percent on Friday morning following its earnings report but is still down 97 percent overall in the past five years.

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